Coastline Contract Services Ltd discuss the challenges they face from the double-whammy of increased Employer National Insurance and minimum wage.
Coastline Contract Services is one of the UK’s leading independent cleaning contractors with about 230 employees and based in the Southwest. Since 2004 they have provided services to a wide range of sectors within the commercial environment. The business has seen consistent growth supported by continuous investment in management, supervision, Health and Safety along with new technologies. When Coastline started out, they used manual processes like many cleaning companies as there were very limited options for bespoke software. In 2008 they discovered CleanLink who offered a range of advanced functionality in one integrated system.
Sylvie Manuell @ Coastline Contract Services Ltd
“An integral database was important to us and CleanLink were able to offer this. We started off using Excel and fortnightly payment runs so it was a constant process of filling in spreadsheets and chasing up timesheets. We implemented CleanLink and Ezitracker at the same time and it made my life so much easier. It wasn’t cheap but it’s been so useful”
Over the years challenges such as COVID have impacted performance and often shrunk the business in the short term. Coastline have weathered the storm extremely well, partly due to the vigilance they apply to their business management processes. Earlier this year they experienced a series of challenges with the changes to National Insurance contributions and the national minimum wage.
The cleaning industry already operates on very low margins, often less than 10% and whilst businesses may have been able to absorb changes in the past, the extent of legislative changes this year is putting significant pressure on profitability. It is estimated Er NI alone will go from 4.5% of a business’s payroll costs to nearly 9% based on how a cleaning business is typically structured. For example, companies with a small workforce working long hours will have high Er NI payroll costs of 8 – 9%, whilst Er NI contribution rates of 1.2% have been possible with a large part-time workforce mostly earning less than £9k pa. Being able to use the structure of a business to help manage costs has historically been a huge benefit, however, with the 2025 changes this advantage is no longer available. An option to help alleviate the impact is to increase prices to clients, however, unsurprisingly this has not been well received:
Sylvie Manuell @ Coastline Contract Services Ltd
“In our industry clients don’t want to pay more money for cleaning. It is difficult however to supply the same service without raising our cost. The changes to the NI calculation has had a huge impact on small to medium size companies, and I believe it’s because government aren’t thinking about us when they make these changes. The bigger companies already get more help from Government due to the threat of high redundancy levels. The reality is that a large number of small businesses going bust is as damaging as a large business but it’s not as newsworthy.”
Coastline are already seeing the impact of the changes. Discussing the increase has been a difficult topic with clients. The cleaning industry like many other industries who employ part time employees are not taken into consideration by the Government when they review tax and rules. It is a shame because these companies used to offer an income supplement to low earning families. Now these families mostly rely on benefits and are penalised if they work too many hours. They are encouraged to limit their income rather than searching for employment that would help them earning more. Whilst this year is proving to be tough, they are anticipating even more challenges next year as the government are making changes to Statutory Sick Pay (SSP) which is already a cost that directly hits the bottom line.
Sylvie Manuell @ Coastline Contract Services Ltd
“In our industry when someone is sick, we must service the contract by sending another employee. In term of charges, it means when we pay SSP and then pay for the cleaning cover for the sick employee, in essence we pay twice the cleaning hours to allow us to cover and pay sick pay. It is easy to see how margins can quickly disappear if absences are not managed.With the current system, an employee must earn a certain amount and wait three days before receiving SSP. If the government implement their new SSP rules, any employee could receive some kind of SSP from day one. This again would be straight hit for the cleaning industry.”
SSP is a big cost to the industry and as SSP is a business funded scheme, again it’s small and medium size businesses that carry the financial burden.
Whilst Coastline have really appreciated the impact the CleanLink software has made to their business, it’s the support from the Customer Services team that has made the difference during challenging times. The depth of industry knowledge the team have is very strong and they really understand HMRC regulations such as maternity etc.
Sylvie Manuell @ Coastline Contract Services Ltd
‘It’s very important when you have issues there’s a team that knows how to find a solution. Regulations are often so complex and hard to understand that I have to call the CleanLink team and bounce back what the right calculations should be. It’s great to be able to check with them to ensure I’ve understood them correctly. It’s more than just software CleanLink are selling and being well trained on the processes is vital support, as calculations need to be right so that the business is operating legally – it’s invaluable peace of mind. CleanLink definitely go over and above with their support’
As the business environment becomes ever more difficult there is a need to ensure companies operate efficiently by making sure processes are managed effectively.
Sylvie Manuell @ Coastline Contract Services Ltd
“To help support Coastline through the challenging times ahead, part of CleanLink’s role is to ensure they consider the end users and provide easy to use software. Technology has its benefits and must enhance the work you are doing; it mustn’t be a hurdle just for the sake of using technological solutions. When we engaging with CleanLink, we made sure we understood where the software would add real value and any areas of the business that were complex, we decided to stay with simpler tools such as paper audits. Within the cleaning industry cleaners also like their paper payslips as they are easier to access. We have a good balance between both technology and paper-based processes which allows us to operate efficiently.”
